Sunrise Toyota, Ltd. v. Toyota Motor Co.

55 F.R.D. 519, 16 Fed. R. Serv. 2d 539
CourtDistrict Court, S.D. New York
DecidedJune 16, 1972
DocketNo. 71 Civ. 1335
StatusPublished
Cited by46 cases

This text of 55 F.R.D. 519 (Sunrise Toyota, Ltd. v. Toyota Motor Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sunrise Toyota, Ltd. v. Toyota Motor Co., 55 F.R.D. 519, 16 Fed. R. Serv. 2d 539 (S.D.N.Y. 1972).

Opinion

LASKER, District Judge.

It is a rare occasion when the successful entry of a new product in a new market can breed such a heady enthusiasm that a dealer, unable to meet the de[522]*522mand, turns on the manufacturer that feeds him. Such appears to be the ease here. In sum, it seems that Toyota automobiles have been so successful with customers in New York that the Japanese manufacturer and distributor, together with their American subsidiary importer and the importer’s subsidiary domestic distributor, cannot supply the demand which independent franchised Toyota dealers could meet.

Impatient with the lack of Toyota vehicles in the New York Region (New York, New Jersey and Connecticut), one of the Toyota dealers in the Region brought this action as a class action on behalf of all its fellow dealers. It alleges (a) defendants have a nationwide policy of forcing dealers to become exclusively Toyota dealers, and defendants allocate an unfairly low number of Toyota vehicles to dealers refusing to become single-line dealers, an alleged restraint of trade resulting in damages to dealers; (b) defendants have conspired to ship to dealers in the New York Region a disproportionately small number of Toyota vehicles, thereby unfairly discriminating against plaintiff class to benefit the defendants and interfere with dealers’ contractual rights and failing to act' in good faith with the dealers; (e) defendants conspired to force plaintiff class to join and remain members of the Greater New York Toyota Dealers Advertising Association (“GNYTDAA”) at an assessment of $35 for each car purchased for advertising, all of which benefits defendants but not the dealers, and in so doing have failed to act in good faith with the dealers and keep dealers free from coercion; (d) defendants have attempted to monopolize parts of the market and sub-markets for sports cars and foreign small cars.

The parties here consist of the plaintiff dealer, Sunrise Toyota Ltd., and the class it seeks to represent, some 87 dealers in the three-state “Toyota New York Region.” Two defendants are Japanese corporations, Toyota Motor Company, Ltd., the manufacturer (“Factory”), and Toyota Motor Sales Company, Ltd., the Toyota distributor (“Sales”). The other two defendants are incorporated in California, Toyota Motor Sales U.S.A., Inc., the American importer of Toyota vehicles (“Importer”), and Toyota Motor Distributors, Inc., which conducts distribution of Toyota vehicles to different parts of the United States (“Distributor”).

Subject matter jurisdiction is predicated on 28 U.S.C. § 1337 for antitrust claims and more specifically 15 U.S.C. § 15 (§ 4 of the Clayton Act), on 15 U.S. C. § 1222 for the Automobile Dealers’ Day in Court Act claims, and on 28 U. S.C. § 1332(a) as to the state law contract and tort claims (diversity jurisdiction) .

Three sets of motions are consolidated:

1. Defendants Factory and Sales move to dismiss this action for lack of jurisdiction over them and for improper venue, Rule 12(b) (2) and (3) of the Federal Rules of Civil Procedure.

2. All defendants move under Rule 12(b) (6) to dismiss the third cause of action of the complaint, which is predicated on the Automobile Dealers’ Act.

3. Plaintiff moves pursuant to Rule 23 to have this suit determined to be a proper class action.

I. JURISDICTION

Defendants’ motions to dismiss under Rule 12(b) (2) for lack of jurisdiction in personam and under Rule 12(b) (3) for improper venue lead us through a labyrinth of varying standards by which to determine whether foreign parent corporations are present in this District. Our meanderings through the maze of legislative and judicial requirements of “presence” lead us to echo sentiments expressed during an earlier period of debate over presence of foreign corporations. In Echeverry v. Kellogg Switchboard & Supply Co., 175 F. [523]*5232d 900, 902-903 (2d Cir.1949), the Court observed:

“The published decisions on what constitutes ‘doing business’ in a State by a foreign corporation are literally legion. Yet, in spite of this vast array of judicial authority, border-line cases still have to be decided each on its own peculiar set of facts, which too often cannot be fitted into a stereotyped pattern. In this field, realism, not formalism, should be dominant; the problem must be solved in the light of commercial actuality, not in the aura of juristic semantics.”

Defendants move to dismiss on the ground that neither Factory nor Sales is present in New York State and that accordingly no personal jurisdiction can be asserted over them. At the outset it can be said with certainty that neither of these Japanese corporations trades in New York directly, and neither their subsidiary Importer nor Distributor maintains an office here. If personal jurisdiction exists as to Factory and Sales, it can only be because Distributor, and, through it, Importer are “doing business” in New York and they are found to be the agents of their foreign parents.

Service of process was made solely upon Distributor at its New Jersey place of business, pursuant to the New York Civil Practice Law and Rules as applied through Rule 4(d) (7) of the Federal Rules of Civil Procedure. Although Importer and Distributor have waived defects as to the manner of service,1 it remains to be determined whether the service is binding on Factory and Sales. For clarity of consideration, each of the tests for determination of in personam jurisdiction over Factory and Sales is set forth separately :

A. Jurisdictional Tests

Personal jurisdiction over the foreign parents under 28 U.S.C. § 1332(a) (diversity) turns on a finding whether they are “doing business” as tested by the traditional standards of § 301 of the N.Y. CPLR. Arrowsmith v. United Press International, 320 F.2d 219 (2d Cir., en bane, 1963). The propriety of venue in a diversity case is determined under 28 U.S.C. § 1391(c) permitting suit against a corporation in any district in which it is “doing business.” The § 301 test again applies. See the close analysis of Judge Friendly in Arrowsmith, supra, at 225, incorporating there by reference the discussion in Jaftex Corp. v. Randolph Mills, Inc., 282 F. 2d 508, 512, 518 (2d Cir. 1960). As Judge Friendly noted in Jaftex, ibid, at 519, 28 U.S.C. § 1391(c) “neither established nor authorized the federal courts to establish standards of corporate presence, . . . 2

Personal

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Bluebook (online)
55 F.R.D. 519, 16 Fed. R. Serv. 2d 539, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sunrise-toyota-ltd-v-toyota-motor-co-nysd-1972.